Why the Japanese government is pushing casinos (even though most Japanese don’t want them)
The Japanese parliament has just legalized casino gambling even though most Japanese people are against it. Here’s why.
Upper house lawmakers sent out the bill on its latest hurdle early Thursday, even though polls have repeatedly shown more than half of Japanese people oppose it, largely over concerns about the ailments social issues that often go hand in hand with gambling.
The bill was the culmination of years of effort, with Prime Minister Shinzo Abe advocating for the measure since taking office in 2012 as part of Abenomics, or Abe’s plan to spur growth in the long moribund economy of the country.
Allowing casinos as part of integrated resorts will boost the economy in the longer term, although they are unlikely to open until 2022, analysts said.
“Immediately, that will act as a buffer after the Olympics,” which Tokyo will host in 2020, Jesper Koll, CEO of WisdomTree Japan, told CNBC’s “The Rundown” on Wednesday. “Once the buildings for the Olympics are built, the next building boom will be integrated resorts.”
Others also pointed to the construction boom.
“Although the government’s intention is likely to allow only one or two maximum per city in Japan, these would be very significant investments,” Richard Huang, gaming, accommodation and entertainment analyst, said Wednesday. recreation in China at Nomura, at CNBC’s “Squawk Box”. . “We are talking about multi-billion dollar investments.”
After the construction boom, analysts expected the economy to continue to benefit from an increase in tourism, which has been a key focus of the Abenomics.
The number of visitors to Japan has already reached a record level, reaching 20.1 million over the January-October period, up 23.3% year-on-year.
Analysts expected the integrated resorts to help Japan continue to attract tourists. Countries in Asia have viewed Singapore’s integrated casino complex model as a model for allowing casino gaming, as it can help attract a greater variety of tourists than just gamblers.
Martin Schulz, senior economist at Fujitsu Research Institute, highlighted the success of Tokyo Disneyland.
“It’s really a magnet for international tourism; it’s a magnet for families to go out. It’s extremely successful,” he told CNBC’s “Street Signs” Wednesday. “If that can be extended to a bit more adult entertainment, that’s where the focus is really on Abenomics right now.”
Estimates of the contribution of casino games to the Japanese economy vary widely, but the numbers were still significant. CLSA estimated that gaming revenue would reach $ 40 billion per year, while Morgan Stanley forecast a smaller amount of $ 20 billion.
But it would not be entirely foreign tourists to Japan.
“The contribution of inbound tourism would certainly be important, but a large part should also be made by the locals,” noted Huang de Nomura. “No one should question the appetite for gambling in Japan given that there is a pseudo form of gambling which is pachinko, which has already amassed $ 20 billion in revenue on an annual basis.”
Pachinko machines are a combination of pinball and slot machines, popular in Japan since the 1940s. Players pay for small steel balls to be added to the machine. Some machines are passive, with players watching to see if balls land in winning holes, and others are more like pinball machines. Winning games are paid out in the form of balls. Because gambling is illegal, players usually exchange their winning balls for prizes.
Huang noted that Japan’s domestic market already has the ingredients for a successful launch of casino games: “the country’s population is huge, 130 million people, who also own a lot of wealth and very densely populated in big cities.” .
—By Leslie Shaffer of CNBC.Com; Follow her on Twitter @ LeslieShaffer1